I have changed job status and am no longer offered insurance, can I cash it out?
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Asked August 1, 2016
That depends on whether your insurance policy has a cash value attached. Only certain types of life insurance policies build cash value. Most group life insurance offered by employers is term life insurance, and term life has no cash value. It only provides a death benefit if a covered employee dies. Occasionally, an employer will offer group universal life or group variable life. With these types of policies, the employee has the option of contributing an amount above the policy premium for the purpose of saving it. These policies can be cashed in, but if any interest has accrued on the savings, you would have to pay taxes on the earnings.
If your policy is an individual policy purchased through an employer sponsored cafeteria benefits plan, and it is whole life, universal life, or variable life insurance, then you may have a cash value, and you should be able to cash it in by contacting the insurance company. There again, you may have to pay taxes on all or part of the money you take out. If yours is a group policy, the employer's human resources department should be able to answer any questions you may have about the policy. If you have an individual policy, the insurance company should be able to answer your questions about the policy.
Answered August 5, 2016 by GWGLife